Fossil Group reported its financial results for the first quarter ended April 2, 2016.
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On a constant currency basis, first quarter net sales decreased 7% as compared to the first quarter of fiscal 2015.
In the first quarter of fiscal 2016, the translation impact from the stronger U.S. dollar negatively impacted net sales by $16.4 million and reduced diluted EPS by $0.08.
In the first quarter of fiscal 2016, reported worldwide net sales decreased 9.0% or $65.3 million driven by a decline in the company’s multi-brand licensed watch portfolio and the negative impact of changes in foreign currency.
The company reported net income for the first quarter of fiscal 2016 of $5.8 million compared to $38.1 million for the first quarter of fiscal 2015. Diluted earnings per share were $0.12, compared to $0.75 for the first quarter of fiscal 2015.
Net sales in the Americas decreased 7% or $26.0 million compared to the first quarter of fiscal 2015, with declines in watches, jewelry and leathers compared to last fiscal year. Modest sales growth in Canada and Mexico was offset by a decline in the U.S.
Net sales in Europe decreased 8% or $18.1 million compared to the first quarter of fiscal 2015, with an increase in leathers offset by declines in watches and jewelry compared to last fiscal year. Within the region, modest growth in France and Germany was offset by a decline in distributor markets and the U.K.
Net sales in Asia decreased 4% or $4.8 million compared to the first quarter of fiscal 2015, with an increase in leathers offset by declines in watches and jewelry compared to last fiscal year. Within the region, an increase in India was offset by declines in most markets, including Hong Kong and China.
Global retail comps for the first quarter of fiscal 2016 decreased 3% compared to the first quarter of fiscal 2015. A strong comparable sales increase in Europe was offset by a decline in the Americas and Asia. A comparable sales increase in leathers and jewelry was offset by a decline in watches.
During the first quarter of fiscal 2016, gross margin decreased 250 basis points to 52.8%.
The favorable impact of the Company’s price initiatives was offset by the negative impact of changes in foreign currencies, higher markdowns and promotional activity, primarily in the outlet stores, and a mix towards lower margin product categories. ■